Hyundai Motor Group's push to sell the lamp business division of Hyundai Mobis (012330) is seen as a move to accelerate its management efficiency drive amid surging internal and external uncertainties. The fallout from tariffs imposed by U.S. President Donald Trump has generated large-scale new investment costs in the United States, while the group also needs to secure funding for its existing future investments, making efficient resource allocation necessary. Hyundai Motor Group (005380) has been conducting affiliate competitiveness reviews and classifying core and non-core businesses since last year. The sale of Hyundai IFC, a forging subsidiary of Hyundai Steel (004020), and the sale of the machine tools division of Hyundai Wia (011210) are all results of this work. With the funds raised through these efforts, Hyundai Motor Group is expected to further accelerate its 21 billion dollar (about 30 trillion won) U.S. investment and its transition into a future mobility company.
According to the investment banking (IB) industry on Tuesday, the Hyundai Mobis lamp business division is considered a prime unit that generates stable profits while also possessing future growth potential. In fact, the lamp business division has been the top contributor to overseas orders among Hyundai Motor Group affiliates. In 2021, the lamp business division alone recorded 1 trillion won in orders, single-handedly accounting for one-third of the group's total (3 trillion won). According to Fortune Business Insights, the global automotive lamp market is projected to nearly double from 39.6 billion dollars (about 54 trillion won) last year to 67.3 billion dollars (about 92 trillion won) by 2030.
When the lamp business division was separated from the chassis and safety division and elevated to a standalone business unit (BU) in June last year, some interpreted it as a decision aimed at further growth. Hyundai Mobis currently has a total of five divisions in addition to the lamp business division: electrification and modules, chassis and safety, electronics, and service parts. At the time, the reasons cited for spinning off the lamp business division into a standalone unit included the rapid growth of the related market and the different nature of chassis and safety products compared to lamp products.
Hyundai Mobis has secured orders for advanced automotive lamps from several global automakers, proving its high technological competitiveness worldwide. Its major clients include Stellantis of the United States (head and rear lamps for major North American models, headlamps for European models), Mitsubishi of Japan (advanced LED head and rear lamps), Subaru and Mazda of Japan (rear lamps), and GAC Mitsubishi of China (headlamps).
The lamp business division operates two production bases in Korea and one overseas. There is the Gimcheon lamp plant, completed in Gimcheon, North Gyeongsang Province, in 2008, and the Jincheon plant, an electrification parts production facility built the same year. In 2017, it invested 140 billion won to build a new lamp plant in Mosnov, Czech Republic, capable of producing a total of 1.5 million units, 750,000 headlamps and 750,000 rear lamps each.
Strategic investors (SIs) are being cited as leading acquisition candidates. This is because private equity fund (PEF) operators inevitably face limitations in resolving Hyundai Motor Group's complex labor-management issues. It is said that many companies wishing to newly enter the electronics business, as well as companies that could create synergy with Hyundai Motor Group, are keeping a close eye on the deal.
Hyundai Motor Group has conducted affiliate business competitiveness reviews through major consulting firms since last year, and has recently accelerated the disposal of non-core businesses within its affiliates. This is interpreted as a measure to secure liquidity amid growing tariff uncertainty stemming from U.S. President Trump, in order to focus on establishing new local plants in the United States and investing in new businesses. Hyundai Motor Group plans to invest 21 billion dollars (about 30 trillion won) in the United States over four years through 2028. The funds will be used for automobiles, parts, logistics, steel, and future industries.
Affiliates are also moving quickly. Hyundai Steel is pushing to sell Hyundai IFC, which manufactures forged products and forged steel for shipbuilding, with Dongkuk Steel cited as a leading acquisition candidate. The expected sale price is about 250 billion won. Hyundai Wia has signed a contract to sell its machine tools division to a consortium of SMEC and Reelson PE for 340 billion won. It plans to complete the balance payment and share transfer by the end of June. Hyundai Mobis' policy is to distinguish between growth businesses and businesses in the stabilization phase, focusing growth businesses on securing technology and expanding markets, while reorganizing stabilization businesses around profitability.
Meanwhile, Hyundai Mobis said, "We are not currently pursuing the sale of the division in question."
